VAT news

Luxembourg doubles planned VAT increase

Ryan Bevan29 January 2014No comments

Luxembourg has updated its plans to raise VAT to compensate for the 2015 change in the EU B2C digital VAT rules.

Its standard VAT rate will rise 2% to 17% (instead of the previously announced 1% rise). The reduced VAT rates of 12% and 6% will rise to 14% and 8%, respectively.

There will be no change to the reduced 3% rate – although the European Commission is challenging Luxembourg’s use of more than two reduced VAT rates.

These increases will help compensate for the estimated €700m annual loss that will arise from the 1st January 2015 change to the B2C place of supply rules on digital services. This switches the VAT liability from the country of the supplier to the country of the consumer.

The new rates should come into force on 1 January 2015, although there may be further changes.